Posted March 21, 2016
Interesting weekend remarks from the Energy Department’s deputy secretary on U.S. oil and natural gas exports to Europe – especially so because DOE is the key federal agency in allowing domestic liquefied natural gas (LNG) export projects to proceed.
Energy Deputy Secretary Elizabeth Sherwood-Randall was speaking at a forum hosted by the German Marshall Fund in Brussels, Belgium, when she discussed the dramatic change in energy markets caused by the U.S. shale revolution. Sherwood-Randall:
“What’s really changed in the global energy landscape is American abundance of supply of both oil and gas. … We are now poised to become significant exporters of both oil and natural gas. We began the export of natural gas just last month, and we are also beginning to export oil.”
The secretary said the new availability of U.S. energy is critically important to allies overseas who are dependent on other countries for energy resources and will provide other options to increase their own energy security. She said this is a key issue for Europe:
“With respect to energy security the most important point is that we need to have diversity of sources – that is our allies and partners need to have options for where they get their resources from, what the fuel mix is and what the pipeline routes are and the infrastructure that receives the resources. As you look at the decisions that have been made by the European Union over the last few years and our coming together in the G7 to set forth principles of energy security … what we’ve really focused on together is the importance of this diversification of routes, fuels and of suppliers.”
Sherwood-Randall urged European countries to develop the infrastructure needed to deliver energy from potential new suppliers:
“Of course, the market determines where the LNG goes, but those who decide to build the infrastructure have more leverage. If you look at what’s happened with Lithuania and construction of the Kleipada LNG terminal, that gave Lithuania a leverage in its negotiations.”
She refers to natural gas imports from Russia – to this point the primary and dominant source of gas for a number of European countries. With U.S. LNG exports starting to come online, Europe and other areas of the globe could soon have different choices in suppliers. The International Energy Agency’s Fatih Birol, another speaker at the forum, put it this way:
“U.S. shale oil revolution is a very good present for Europe. … Even if there is not 1 bcm of export from the U.S. to Europe, the fact that in case of a major exporter of gas that wants to increase the prices – your big neighbor here – or if the neighbor doesn’t behave himself, the fact that U.S. Atlantic [gas exports] can come at any moment, the fact that there is an alternative there ... is very important for Europe. It will make the European importers’ hands much stronger compared to a few years ago.”
All of the above is certainly true. And with U.S. natural gas production staying high despite lower rig counts (chart) – a credit to greater efficiency by domestic producers, according to the U.S. Energy Information Administration (EIA) – there’s more reason for the Energy Department to expedite approvals for domestic LNG exports to non-Free Trade Agreement countries. A number of projects have gotten approvals, but final, non-FTA authorizations for more than 20 facilities remain under review at the department.
The global LNG market is a competitive arena, with other nations vying for opportunities to meet customer demand, including Iran. It’s critically important that government red tape not be a barrier to the advancement of private investments that would allow the United States to become a major player in the worldwide marketplace alongside other major producers.
ABOUT THE AUTHOR
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.